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The True Cost of the Iraq War: $3 Trillion and Beyond
Writing in these pages in early 2008, we put the total cost to the United States of the Iraq war at $3 trillion. This price tag dwarfed previous estimates, including the Bush administration's 2003 projections of a $50 billion to $60 billion war.
Former US Defense Secretary Donald Rumsfeld is seen in Washington, DC, two days before resigning. At the outset of the Iraq war Rumsfeld said the operation would cost in the region of 50 billion dollars, with the then defense secretary dismissing higher estimates as "baloney."(AFP/File/Mandel Ngan) But today, as the United States ends combat in Iraq,
it appears that our $3 trillion estimate (which accounted for both
government expenses and the war's broader impact on the U.S. economy)
was, if anything, too low. For example, the cost of diagnosing, treating
and compensating disabled veterans has proved higher than we expected.
Moreover, two years on, it has become clear to us that our estimate did not capture what may have been the conflict's most sobering expenses: those in the category of "might have beens," or what economists call opportunity costs. For instance, many have wondered aloud whether, absent the Iraq invasion, we would still be stuck in Afghanistan. And this is not the only "what if" worth contemplating. We might also ask: If not for the war in Iraq, would oil prices have risen so rapidly? Would the federal debt be so high? Would the economic crisis have been so severe?
The answer to all four of these questions is probably no. The central lesson of economics is that resources -- including both money and attention -- are scarce. What was devoted to one theater, Iraq, was not available elsewhere.
Afghanistan
The Iraq invasion diverted our attention from the Afghan war, now entering its 10th year. While "success" in Afghanistan might always have been elusive, we would probably have been able to assert more control over the Taliban, and suffered fewer casualties, if we had not been sidetracked. In 2003 -- the year we invaded Iraq -- the United States cut spending in Afghanistan to $14.7 billion (down from more than $20 billion in 2002), while we poured $53 billion into Iraq. In 2004, 2005 and 2006, we spent at least four times as much money in Iraq as in Afghanistan.
It is hard to believe that we would be embroiled in a bloody conflict in Afghanistan today if we had devoted the resources there that we instead deployed in Iraq. A troop surge in 2003 -- before the warlords and the Taliban reestablished control -- would have been much more effective than a surge in 2010.
Oil
When the United States went to war in Iraq, the price of oil was less than $25 a barrel, and futures markets expected it to remain around that level. With the war, prices started to soar, reaching $140 a barrel by 2008. We believe that the war and its impact on the Middle East, the largest supplier of oil in the world, were major factors. Not only was Iraqi production interrupted, but the instability the war brought to the Middle East dampened investment in the region.
In calculating our $3 trillion estimate two years ago, we blamed the war for a $5-per-barrel oil price increase. We now believe that a more realistic (if still conservative) estimate of the war's impact on prices works out to at least $10 per barrel. That would add at least $250 billion in direct costs to our original assessment of the war's price tag. But the cost of this increase doesn't stop there: Higher oil prices had a devastating effect on the economy.
Federal debt
There is no question that the Iraq war added substantially to the federal debt. This was the first time in American history that the government cut taxes as it went to war. The result: a war completely funded by borrowing. U.S. debt soared from $6.4 trillion in March 2003 to $10 trillion in 2008 (before the financial crisis); at least a quarter of that increase is directly attributable to the war. And that doesn't include future health care and disability payments for veterans, which will add another half-trillion dollars to the debt.
As a result of two costly wars funded by debt, our fiscal house was in dismal shape even before the financial crisis -- and those fiscal woes compounded the downturn.
The financial crisis
The global financial crisis was due, at least in part, to the war. Higher oil prices meant that money spent buying oil abroad was money not being spent at home. Meanwhile, war spending provided less of an economic boost than other forms of spending would have. Paying foreign contractors working in Iraq was neither an effective short-term stimulus (not compared with spending on education, infrastructure or technology) nor a basis for long-term growth.
Instead, loose monetary policy and lax regulations kept the economy going -- right up until the housing bubble burst, bringing on the economic freefall.
Saying what might have been is always difficult, especially with something as complex as the global financial crisis, which had many contributing factors. Perhaps the crisis would have happened in any case. But almost surely, with more spending at home, and without the need for such low interest rates and such soft regulation to keep the economy going in its absence, the bubble would have been smaller, and the consequences of its breaking therefore less severe. To put it more bluntly: The war contributed indirectly to disastrous monetary policy and regulations.
The Iraq war didn't just contribute to the severity of the financial crisis, though; it also kept us from responding to it effectively. Increased indebtedness meant that the government had far less room to maneuver than it otherwise would have had. More specifically, worries about the (war-inflated) debt and deficit constrained the size of the stimulus, and they continue to hamper our ability to respond to the recession. With the unemployment rate remaining stubbornly high, the country needs a second stimulus. But mounting government debt means support for this is low. The result is that the recession will be longer, output lower, unemployment higher and deficits larger than they would have been absent the war.
* * *
Reimagining history is a perilous exercise. Nonetheless, it seems clear that without this war, not only would America's standing in the world be higher, our economy would be stronger. The question today is: Can we learn from this costly mistake?
Joseph E. Stiglitz, a professor at Columbia University, was chairman of President Bill Clinton's Council of Economic Advisers and winner of the Nobel Prize in economics in 2001. Linda J. Bilmes is the Daniel Patrick Moynihan senior lecturer in public policy at Harvard University. They are co-authors of "The Three Trillion Dollar War: The True Cost of the Iraq Conflict."
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37 Comments so far
Show AllSorry Professor, but if we were to run another stimulus right now all we would be doing is stimulating the economies of China and India. Before we can stimulate the US economy we must force all of the so called American businesses to return the jobs to the US that they sent overseas. The only way to do that is to kill all tax incentives for shipping jobs overseas. Then the government needs to levy heavy duty tariffs on all products coming into the country. This will force companies such as GM, Apple, Maytag, Nike and Boeing amongst many others to either return jobs that they out sourced, or watch as the cost of the tariffs price their products right out of reach of the American market. Next the government could give tax credits and help new companies with start up costs to replace those companies that outsourced our jobs. Also any company that wanted to do business with the US government must have it's company headquarters based in the United States so that it pays corporate taxes to the US! Any company that receives financial aid or does contract business with the US Government must agree to allow it's work force to decide if they want to be represented by a labor union. Last but not least the United States Government must break all ties with the WTO and cancel our participation in NAFTA, CAFTA, GATT and any other anti labor trade agreements that are currently in force. These are just a few of the many steps that we must take to restore the economy of the United States. Also for all working and middle class people across the US, quit listening to the idiots on TV and radio, these are the same people who planned the financial failure of our economy and now the compliant corporate media is pushing there so called fixes for our economy. None of their so called remedies will cost the people who have profited so handsomly from the great corporate welfare state of the last thirty years a penny of their vast fortunes. Their remedies will cost us dearly in the form of higher taxes, longer work hours with lower pay and less benefits, loss of Social Security and Medicare and Medicaid benefits!
Oh boy!!! Z1 hit all the high points on what we must do now:
1. Force all 'so called' American businesses to return jobs to the USA.
2. Put heavy tariffs on all products coming into our nation.
3. Any corporation wanting to do business with the U.S. government must have their
head quarters in the United States and pay U.S. taxes.
4. Get out of NAFTA, CAFTA, WTO, and GATT.
I would like to add number five:
Since the Supremos gave corporations the rights of persons under our Constitution so they could actively participate in our political system' I suggest that these rights may extended only to corporations that have their main headquarters in the United States.
There are still additional costs to be added in:
1) Reparations payments to Iraqi individuals, Iraqi society, and the Iraqi government. The war was an illegal war of aggression. Some economists should start adding up the costs of a) medical and funeral costs, pain and suffering to family members, and lost income (past and future) for all Iraqi victims of our war, b) destruction of Iraqi infrastructure, b) theft of Iraqi oil and archeology, c) destroyed businesses, d) economic opportunity costs, and e) compounding interest on all of this.
2) Our own lost opportunity costs, including the costs of secondary or derivative consequences, including here loss of transportation infrastructure, loss of investment in alternative energy resources, loss of education for the American society.
Well said. Reparations indeed. Reality calls.
It is true that in any sensible mind the full costs of the war have to include the costs of reparations in both Afghanistan and Iraq. They also have to include the costs arising from these wars that have been and are yet to be borne by other countries of the world. Until such time as they do the USA will remain a thoroughly disreputable entity.
Which, for reasons obvious to any reader of even the psychopathic media of the USA, makes the point. There will be no reparations other than a show; a gesture by another ludicrous 'commander in chief' on the deck of another aircraft carrier. This is not a joke any more. It is the sign of serious collective mental retardation. Where there once was a flawed but nevertheless human country much as all other countries, now there is a huge black hole and all that escapes from it is the hollow echoing rumble of nameless, tumbling junk.
To repeat, the USA as a conception is a thoroughly broken entity. This is the real cost of the wars. This is the reality that extends beyond any fiscal, political or military details. US citizens must stop fooling themselves, and anyway, nobody else is interested any more. The longer this is ignored the greater the harm that will result in the minds of particularly the children in that place presently known as the USA . What the world is witnessing is the self-destruction of hundreds of millions of people who call themselves 'American'. It is a collapse of intellect, never seen before on such a massive scale, and it is in real time.
Moreover, there is much to do, for it started long before these wars did. The US entity must be reconfigured. Regime Change was applied to the wrong place.
Recently a friend gave me "The Very Best of Peter Paul and Mary" CD. Yesterday I was listening to Noel Paul Stookey/Jim Wallis song "El Salvador". It reminded me of the war in Iraq especially these words:[$3 trillion spent and six hundred million Iraqis slaughtered] "Kill people to to set them free who put this price on their liberty?"
I was also reminded of Afghanistan with these words: "$600,000,000 in El Salvador. If they spend half a million more, bomb all day and burn all night ,until there is not a living thing in sight in El Salvador. Keep bringing troops from the U.S.A. Kill people to set them free , who put this price on their liberty?"
I am not sure of the exact words but you get the idea. America is a brutal, violent, nation. Where is the change we can believe in?
genie:
It is 6 million Iraqis, not 6 hundred million.
It is not ""$600,000,000 in El Salvador." It is most likely $60 million.
Try and practice writing out 1,000, then 1,000,000 (milion), then 1,000,000,000(billion) without trying to think about these numbers conceptually as it seems that you have never encountered anything more than a $1,000 in your life. Realize that each higher number adds three zeros than the immediate lower number to the left, which means that, say, 1 million can be got from a thousand $1,000 bills, or
1,000 x $1,000.
I don't think, and others may disagreee, that you or others who are numerically challenged have any right to express your opinions on matters economic that require quantitative data. Being literate in literature, history,journalism, novel writing,sociology and other arts and humanities does not carry with it an automatic license to talk nonsesnse on matters numeric/economic or scientific.
Sorry, no sympathy from me. You may be a good person, but you are a lazy intellectual, one of many on CD having the same disabling innumeracy and not doing anything about it such spending 5-6 hours practicing basic arithmetic at grade school level. It is the preponderance of these literary but numerically and scientifically challenged intellectuals among the progressive movements that create a lack of vision and articulation of the means to reach that vision in a sustained practical manner that makes progressives totally incoherent to ma/pa grocer, baker and 8-5 joe lunch bucket. That vacuum is filled by red neck Republicans peddalingg such nostrums as $1 trillion tax cut to help "small business" bring prosperity back to America. Their concept is numerically wrong right from the outset as:
Tax Revnue(TR) - Government Spending (GS) = Deficit(D)
Or
TR - GS = D
D INCREASES if Either GS increases (as in infra structure spending or stimulus)or TR DECREASES ( as in Bush Tax cut)
All the interminable debates and discussions I have seen on TV with Republicans such as Mitch McConnel are verbal jousts where the questionaire keeps asking the Senator as to why he thinks a tax cut would not increase defecits, and the wily senator runs round in circles with words and phrases that have no meaning content with the interviewer not able to stop him with a point plank questsion with a multicoloured touchscreen next to him. The screen coud pictorially show TR as a blue rectangle, GS as a Green Rectangle and D as a Red rectangle. Then show that sqeezing TR, keeping GS constant (i.e.,'ceteris paribus')would balloon the red D area as badly or more (if tax is collected from the economic activity created by the GS) as increasing GS would. Then ask the Senate Leader of the Republicans:
Senator, do you see clearly the ineluctable mathematics that that tax cuts for the rich would inflate deficits as much or more than government spending on infrastructure?
If the erstwhile sentaor then launches into his nonsensical rigamarole, the interviewer can say that he does not make the laws of arithmetic, neither does the Senator, and to deny self evident mathematical truth is insane, and NOT worthy of response.
No progressive has yet thought of this simple device and sent it MSNBC to Ed Schultz or Rachel Meadow, both literati but numerically not as quick. I am not going to because I fail to excite the Albert Camus crowd here. They have the idea and the prose behind it is below their dignity to read - - it is pedestrian. So why should I care? I am fine. The jobless and self-appointed messiahs on CD for the jobless can and should do this much work that will have a visceral appeal to the masses before November elections if repeated on TV.
The cost to all Americans of losing things like honor, privacy, due process and a host of other items to which a monetary value cannot be attached, is far greater.
Good for Stiglitz and Bilmes.
With thanks,
Hector
First four comments say it all.
Not much to add to so much truth and wisdom.
If only the public could comprehend the cost, not only financially but the totally
criminal devastation with the loss of the lives and infrastructure of the countries
we attack illegally, and the loss of our military and all that follows those who return,perhaps we could halt further madness.
The American war crimes in Iraq have become the most expensive corporate subsidy in history.
A variety of Big Oil corporations now have contracts with the the Iraqi Green Zone "government". Banking in Iraq is also under foreign corporate control. And Iraqi agriculture is also on the corporate hit list with Cargill leading the charge.
This is worth the read on Iraqi agriculture:
http://www.organicconsumers.org/articles/article_1867.cfm
The invasion and permanent occupation of Iraq will be burden on the U.S. taxpayer for the rest of this century if the present situation does not change.
But the economic math of this corporate imperialism is that trillions are being spent to subsidize what will only be billions in corporate profit.
A guess is that a thousand public dollars are wasted to subsidize each dollar of corporate profit.
The MIC players profit, Big Oil profits, bankers profit, corporate agriculture profits, but the American taxpayer loses at a time when the overall economy is in decline.
Imperial over-extension and crimes against humanity are never a pretty picture.
"The True Cost of the Iraq War:....". is immediately followed by "Writing in these pages in early 2008, we put the total cost to the United States...." So the "True Cost" is only the cost to me (the US). The cost to "Other" is irrelevant and therefore not worthy of discussion.
This is precisely how cannibalistic thinking goes. Goodluck with "Change"!
First four comments say it all.
Not much to add to so much truth and wisdom.
If only the public could comprehend the cost, not only financially but the totally
criminal devastation with the loss of the lives and infrastructure of the countries
we attack illegally, and the loss of our military and all that follows those who return,perhaps we could halt further madness.
Another potential cost of this illegal invasion and occupation could be the losses of the people of Iraq.
This is an issue that I have never seen discussed, even in the "progressive" media.
If the U.S. is ever forced to pay compensation for this imperialistic war of aggression, the human and property damages suffered within Iraq would be in the $Trillions.
There would have been no war in Afghanistan [with a Pentagon summary of the attack-to-be, dated September 8, 2001, and the Patriot Act written well before 9-11 happened] if there were not a pack of cut-throats in or connected with our Washington D.C. government, within segments of our military, mega-corporations, inclusive of mega-financial houses, the Zionist government of Israel, and let's not forget the Saudis, all of whom whose greed and psychopathic need for control, power, and more control of the green, gold and liquid black stuff, has just about done us in.
If I recall correctly, Secretary of Defense Donald Rumsfeld announced on a news program just prior to the weekend before 9-11 that the Pentagon could not account for 3 Trillion dollars. That little announcement got lost when the Twin Towers and Building 7 fell from their planned demolition.
Quite a few people reaped the harvest of several Trillion lost and additionally expended Trillions of dollars in these last nine years for wars both in Afghanistan and Iraq, not to mention all the war-game profits made in Pakistan, Yemen and elsewhere, both actively and potentially.
The Truth of 9-11 is still the most important factor in lifting the lid off a simmering stew and bringing it to full public boil. If that never happens and justice is never served, our nation will continue to be manipulated along this wretched downhill path by some of the worst villains in history.
With all due respect for the analyses rendered by Stiglitz and Bilmes, unless there is a drastic cutting of the strings held by the puppet meisters, we currently are on a course that will not change unless by some miracle the fire of Truth ignites and burns holes in the carefully-penned script that was foisted upon us with the presidential selection in the month of November, year 2000, and opened the curtains on the play that was meant to lead us to where we are now.
A very small percentage of us, both globally and nationally, love the play, but for too many it has long been a tragedy and now for too many more it is a comedy of terrible errors with the dour face of tragedy scowling through the cracked mask.
Will we smarten up in time? I wonder. Will Truth prevail and Justice be served? I wonder.
A hellava' ride. No doubt about that.
/cm
I believe it was a GOA report and it was closer to two trillion. Cynthia McKinney was one of the few that saw that report and tried go do anything about it, but of course she's been labelled a kook in the MSM and basically silenced. That was ten years ago. Howuch can they not account for now?
Not to nitpick but it was 2.3 trillion, announced on 9/10, then the next day the US and Israel attacked the twin towers and that hellhole called the pentagon and shot down an airliner in PA.
Money gone missing from the Pentagon:
Fiscal Year 1999: $2.3 trillion missing.
Fiscal Year 2000, $1.1 trillion missing.
See Cynthia McKinney question Rumsfeld on YouTube.
or read the text on fromthewilderness.com
cm and parallax: thanks for your comments. I concur with each of you. I read the office of naval intelligence was in the section of the pentagon hit. Building seven housed SEC investigators and accountants, too. It's a crying shame so many are in deep denial about the cumulative facts surrounding this black day.
"Trust those who are seeking the truth. Doubt those who find it." Andre Gide
Jack
That money must be worth a fortune.
(and that is not just trite levity -it goes beyond that)
Simple arithmetic. 300 million people in the US, 3 trillion dollars.
$10,000 for every man, woman and child.
Nothing to worry about. We borrowed it from Communist Red China where we sent all of our manufacturing jobs.
Buy American or don't buy.
DOH!!! I'm currently living in China (though not working), but I did buy some Welch's Grape Juice in a Walmart here that had this printed on the label: Made in the USA.
Okay, and you believe this in a country that uses Lady Di to sell slips and bras WHY?
But Dick Cheney said, "Reagan proved deficits don't matter."
Feel better now?!
-30-
The Iraq War underscores the tragic policies that result when our leaders base their decisions on divine guidance and ego rather than the less colorful tools of research, logic, and historical perspectives.
Finally someone decided to tell the truth about our money . Now if when you are out there carrying your placards and are not playing political gamesmanship with the words you wrote on your placards remove the President's name off your placards and put the names of your Congressional representatives on your placards and you will see the game plan change . Our military would never have set foot in Iraq or Afghanistan if Congress had not handed the military and the profiteers the money to go there in the first place . And the military would leave now if Congress stopped the funding . All of the hoopla we see and hear via our media is nothing more than gamesmanship played by the corporate MSM , members of Congress , and the rest of the profiteers . All in the name of "weak on terrorism" . You will never hear of a filibuster regarding war , conflict , or foreign aid . Too much profiteering to be had in these programs . Lives mean nothing . Neither does burdening the American people with huge debt . Congress has handed one end of a siphon connected to our Treasury to profiteers and for years watched as the money flowed out .
"....remove the President's name off your placards and put the names of your Congressional representatives on your placards and you will see the game plan change..." (unionave September 6th, 2010 3:56 am)
Union,
Love it. That would certainly make all politics local indeed...
It is not a siphon, it is a high-powered pump that has already sucked most of the country dry.
Seeing Rumsfield's pic when coming back to this article to read the comments, this thought occurred to me: How much of that $3 trillion did Rummy bank?
So Donald "Aspartame" Rumsfeld's picture appears once again.
Didn't he announce that the Pentagon had lost track of 2.7 trillion dollars just before that aircraft was flown remotely into the part of the building into which the accounting section had just recently been moved?
Add that to the cost of the war and the result is an average of 20,000 dollars for each person in the country.
Talk about a money sink.
Seeing Rumsfeld's pic, this thought occurred to me:
Why wasn't anyone ever indicted, and seriously questioned without immunity, and prosecuted appropriately for intentionally lying to the American people and the news media about the evidence and the reasons for attacking Iraq?
It's one thing to drive a country into massive debt through immoral and irresponsible actions -- history is replete with such sad stories.
But it's quite another to not prosecute the responsible parties for their criminal actions. Even countries like Argentina and Chile eventually got around to investigating and punishing those who created hell in their countries.
Tragically, the toothless media and the timid Obama Administration have lulled mainstream America into thinking we need to play nice, forget the sordid past, and "move on". Well I'm sorry, but I want those bastards held responsible. So should every American, who as this article points out is footing the bill, not to mention providing their sons and daughters as cannon fodder.
We prosecute millions of people in this country much more severely for crimes that are much less serious.
Good God. Where's the outrage??? We should be pulling Bush & Cheney & Rumsfeld out of retirement and grilling them on national television.
Good God. Where's the outrage??? We should be pulling Bush & Cheney & Rumsfeld out of retirement and grilling them on national television.
Only problem is that they stole so much of that $3 trillion they can buy their ways out of being prosecuted. How many rich people go to jail?
Indeed, Dizi, how many in the land of liberty and justice for all - those with money?
It's sickening.
Jack
The True Cost of the Iraq War: $3 Trillion and Beyond,,,,
or more, we will never know, the country has been hijacked by those that want to control the world,
They have thousands of secrets , and a police state , nation wide stazi network of spys to report on people who dare ask questions.
You know , and I know, that as long as the Patriot Acts are the law of the land, and warrant surveillance rules over us feeding us fear, we will never know the truth.
Don't comment on the article just correct my spelling and the structure of my sentences and paragraphs. And don't forget about my math.And think of all the names and child like slurs to call me so we may all look into the vacuum of your mind.This $3 trillion price tag was predicted while W was still Commander in Chief of world hegemony and failed empire.
"...and you never ask questions when god's on your side..."
Lots of good, albeit redundant comments, yet nobody except Billy Hill came close to the subject that the "free press" was totally complicit with this endeavor. STOP purchasing daily news papers, weekly 'news' periodicals and stop listening to nightly news. There are enough outlets on the internet to become informed on less than an hourly basis, let alone daily. When MSM gets the idea that people are tired of being lied to and pandered to perhaps they'll realize that they have a "responsibility". All of those mentioned in the comments above used MSM to promulgate lies and false scenarios. The money is secondary to all that, in my opinion.